“We are surprised to learn that the Bank is creating obstacles to enable JWK Group companies to repay the Bank’s debt earlier by virtue of taking up bonds issued by Polish Real Estate Investment Ltd (‘PREI’). We would therefore like to draw your attention to the following provisions of Polish law, which, pursuant to Article 15 of the Regulation (EC) No 593/2008 of the European Parliament and of the Council of17 June 2008 on the law applicable to contractual obligations (Rome 1), are applicable in the present case. Pursuant to Article 356 § 2 of the Civil Code (‘CC’), if a monetary claim is due, the creditor (here: the Bank) may not refuse to accept performance from a third party, even if it acts without the debtor’s knowledge. Furthermore, pursuant to Article 518.2 in connection with Article 518.1.1 of the Civil Code, if a third party pays a creditor by paying another person’s debt for which the third party is liable either personally or with certain assets, the creditor may not refuse to accept a performance that is already due. This means that the Bank may not refuse to accept the benefit of the said PREI Bonds from the JWK Group companies as soon as it becomes due (on pain of falling into creditor default). However, the Bank may voluntarily accept the benefit of repayment of the bonds from the Principals earlier, i.e. before it becomes due, especially as PREI’s consent is not necessary to accept such repayment. We therefore hope that the Bank will issue a Promissory Note in favour of the JWK Group companies, as requested yesterday, and will work with these companies to obtain satisfaction of the claim for repayment of the bonds issued by PREI.”
“the plaintiff ought at least to be required before proceeding with his action to establish a prima facie case (i) that the company is entitled to the relief claimed, and (ii) that the action falls within the proper boundaries of the exception to the rule in Foss v. Harbottle”
“There is an exception to the rule where what has been done amounts to fraud and the wrongdoers are themselves in control of the company. In this case the rule is relaxed in favour of the aggrieved minority, who are allowed to bring a minority shareholders’ action on behalf of themselves and all others. The reason for this is that, if they were denied that right, their grievance could never reach the court because the wrongdoers themselves, being in control, would not allow the company to sue.”
“A prima facie case is a higher test than a seriously arguable case and I take it to mean a case that, in the absence of an answer by the defendant, would entitle the claimant to judgment. In considering whether the claimant has shown a prima facie case, the court will have regard to the totality of the evidence placed before it on the application.”
“117. There is however no real evidence that the Bank or Mr Czeremcha or Mr de Makay were involved in, or were aware of, the steps being taken in relation to grant of the 2016 PoA or the entry into the Collateral Agreement, still less that they were aware of or a party to what is said to have been their intended purpose. The Bank and its representatives were aware that M-JWK was paying the Convertible Bonds early and that such payment may not have been consistent with the arrangements put in place under the FFSA and the Escrow Agreement for repaying the Convertible Bonds. There is also some evidence that the Bank and Mr de Makay may have been aware that M-JWK’s purpose in making the payments was to enable it to bring a subrogated claim against the Company …. However, it is difficult to see that this supports the case that the Bank and its representatives had any involvement in the alleged misconduct of Wladyslaw and Michael Jaroszewicz in relation to the grant of the 2016 PoA and the entry into the Collateral Agreement. In any event, as explained above, it does not appear that the Collateral Agreement itself has caused the Company any loss (since the Certificates were subsequently returned by M-JWK to the Company). 118. As described above, the key events which appear to have caused loss to the Company were the entry of the Default Judgment followed by the Bailiff Sales and the issuance of the Series H-K certificates. However, there is no evidence which I was shown of the involvement of the Bank, Mr Czeremcha or Mr de Makay in these matters.”
“Mr Czeremcha and/or Mr De Makay knew that (on or around9 September 2015 ) the Bank was initially reluctant to allow an early repayment of the Convertible Bonds by M-JWK without PREI’s approval. They at least suspected that the proposal, which was part of Wladyslaw Jaroszewicz’s and/or Michael Jaroszewicz’s plan to procure the Subrogation Claim in furtherance of the intended expropriation of PREI’s assets, was not in PREI’s interests and/or required PREI’s approval (which they knew had not been given). Despite this knowledge and/or suspicion, the Bank ultimately decided to accept the early repayment of the Convertible Bonds by M-JWK. Durnont understands that Wladyslaw Jaroszewicz and/or Michael Jaroszewicz and/or M-JWK put the Bank under pressure to accept the proposal.”
“Each of the parties (other than the Company) undertakes to the others that he will exercise all powers and rights available to him as a director, officer, employee or shareholder in the Company (or in any other Group Company) in order to give effect to the provisions of this Agreement and to ensure that the Company complies with its obligations under the Agreement.”
“101. That said, whilst I have taken into account the views which Mr Moskwa has expressed about whether the pleaded facts would, if assumed to be true, satisfy the requirements of Article 415, I have also considered the question for myself. That is not least because Mr Moskwa’s conclusions are expressed in summary form and do not elaborate on how the underlying facts, which I have set out above, are said to give rise to claims against each of the Defendants. Further, I also note that his views were expressed in relation to the original Particulars of Claim which has subsequently been amended. … 120. I have taken into account that Mr Moskwa opines that, if the facts pleaded in the original Particulars of Claim are assumed to be true, then he considers that the requirements under Article 415 are satisfied in relation to the claims against the Bank, Mr Czeremcha and Mr de Makay. However, as noted above, his evidence contains no attempt to link the evidence and the chronological narrative to the requirements for a claim under Article 415.”
“Assuming (as instructed) that the factual matters pleaded in the Particulars of Claim are established, it is my opinion, that PREI would be able to establish liability against Mr Jan Czeremcha based on art. 415 of the PCC in connection with: (i) breach of community principles of life; (ii) breach of general prohibition of appropriation of someone else’s movable property or property rights (derived out of art. 284 of the Criminal Code); (iii) breach of general prohibition of causing another person to disadvantageously dispose of property by misleading him, or by taking advantage of a mistake or inability to adequately understand the actions undertaken (derived out of art. 286 of the Criminal Code); iv) breach of general prohibition of causing damage to an entity by person managing its business by way of exceeding powers granted to such person or by failing to perform his duties (derived out of art. 296 of the Criminal Code) as the abettor to Fazita Investment Limited, Mr Wladyslaw Jaroszewicza, Mr Michael Carl Jaroszewicz and M-JWK Management sp. z o.o. (as regarding points (i) - (iii) above) and as the direct perpetrator (as regarding point (iv) above). The liability would stem from acts and omissions indicated in paragraphs 33-65 and 67(b) of the Particulars of Claim and constituting breaches referred to in previous sentence.”
“The Claimant also pleads that the Bank breached clauses 17 and 24.2 of the SSA (which in turn refer to relevant restrictions on the transfer of shares in the Company’s Articles of Association: see regulations 22 to 26) by entering into the 2014 SPA, which it is said involved the Bank’s shares in the Company being agreed to be purchased by PSPT. However, I do not see that this is correct since the 2014 SPA appears to envisage that, prior to any transfer of the shares taking place, there would be compliance with the pre-emption provisions contained in the Articles: see e.g. Clause 4.2, the definition of ‘Transfer Notice’ and the form of Transfer Notice attached as Schedule 1 to the 2014 SPA, and Clause 5.1. As noted above, it does not appear that any transfer of the shares has in fact taken place. Further, I have not seen any evidence that, even if there had been a breach in this respect, that this has itself caused any loss to the Company. Accordingly, I do not consider there is a prima facie case in relation to this claim against the Bank either.”
“10. The Claimant says that even if there was not a transfer of the shares there is still a real prospect of the Court of Appeal concluding that there was a breach of clauses 17 and 24.2 of the SSA. This particular argument was not put to me in the course of the hearing. Even assuming that the Claimant would be permitted to run it on appeal, it does not seem to me to have any prospect of success; the short point is that the 2014 SPA precisely appears to envisage and anticipate there would be compliance with the pre-emption provisions in the Articles before any transfer of the shares took place: see [142] of the Judgment. 11. In any event, I do not see that there is any real prospect of the Claimant establishing that any such breach of the SSA by the Bank as it alleges has caused loss to the Company.”
“any shareholder (Proposing Transferor) desiring to sell, transfer or otherwise dispose of any Shares which it holds shall … give notice in writing to the Company (Transfer Notice) specifying the number and classes of Shares the Proposing Transferor desires to sell, transfer or otherwise dispose of (Sale Shares) … and the price (Sale Price) at which the Sale Shares are offered by it and the third party (if any) to whom it proposes to transfer the Sale Shares if they are not purchased by the other shareholders pursuant to the following provisions of this Regulation 24”
“Completion will take place at the offices of Allen & Overy (or any other place agreed between the Parties) on the 30th day following the day on which the Company’s directors sent, In accordance with Regulation 24 (g) (iii) notices to the Ordinary Transferees, the A Transferees and B Transferees inviting them to exercise their respective rights According to Reg. 24 of the Articles of Association.”
“i. not to sue, transfer. pursue, endorse the pursuit of, instruct or assist in the pursuit by any other person of any claims or initiate any proceeding before any court or any public authority regarding the Collateral Agreement, the April Power of Attorney, the Collateral Claims or Other Claims, including future Other Claims; ii. that as being in the best interest of the Company, they will not prepare, instruct, assist in preparing, finance or in any other way endorse the defence of: (i) Claim No. CL-2016-000048 lodged by M-JWK against PREI in the High Court of Justice, (II) Claim No. XX Geo 273/16 lodged by Mr. Wladyslaw Jaroszewicz and Fazita Investments Limited against, among others, the Company in the Warsaw District Court, (iii) Claim No. 1223/2016 lodged by Mr. Wladyslaw Jaroszewicz and Fazita Investments Limited against, among others, the Company in Cyprus and (iv) any ancillary motions for injunctive relief filed by M-JWK, Mr. Wladyslaw Jaroszewicz, Fazita Investments Limited or their Affiliates concerning or relating to the proceedings specified in (i), (ii) and (iii) above; iii. that as being in the best interest of the Company, they will not prepare, instruct, assist in preparing, finance or in any other way endorse the filing of counterclaims or motions for injunctive relief or auxiliary motions, documents, requests, applications or filings relating to or concerning: (i) Claim No. CL-2016-000048 lodged by M-JWK against PREI in the High Court of Justice ….”
“The general principle which I would derive from the cases is that a shareholder who has done nothing inconsistent with an intention to comply, at the appropriate moment, with the subsisting provisions of the articles, cannot be required to serve a transfer notice at an earlier stage. The obligation attaches only when the shareholder has entered into arrangements … which place him under a contractual obligation to execute and deliver a transfer in violation of the rights of pre-emption. With these principles in mind. I return to the terms of the old documentation. The vendors agree to sell the beneficial interest in their shares to Northern Racing. [Counsel for the petitioner/claimant] accepts, for the purposes of these preliminary issues, that ‘transfer’ in art 23(b) means a transfer of the legal title to the shares and that a sale of a beneficial interest, whereby the vendor becomes trustee of the shares for the purchaser, does not of itself infringe the articles. What makes it an infringement is the fact that, as [counsel for the petitioner/claimant] submits, the beneficial ownership of Northern Racing entitles it to demand a transfer of the legal title and puts him in the same position as if it had been granted an option to acquire the shares. In my view the sale of the beneficial ownership by the old documentation was so qualified that … it did not give Northern Racing the right to call upon a shareholder to do anything inconsistent with the pre-emption rights.”
“For my part I have found the authorities to be of little help. In each of them the decision depended on the particular facts …. In each of the other cases the facts as a whole were clearly distinguishable. I do not feel able to derive any general principle from the authorities and certainly not from Lyle & Scott Ltd v Scott’s Trustees [[1959] AC 763 ], on which Lord Hoffmann particularly relied. Nevertheless, I am, for the reasons I have given, satisfied that he came to a correct decision.”
“the arrangements between Mr Quinlan and the Barclay interests neither resulted in Mr Quinlan having a desire to transfer shares for the purposes of cl 6.1 nor breached cl 6.17 because the sale and transfer contemplated by the February agreement was subject to compliance with the shareholders’ agreement and Coroin’s articles. The position is on all fours with that in Re Ringtower Holdings plc[1989] BCLC 427 and Re Sedgefield Steeplechase Co (1927) Ltd[2001] 1 BCLC 211 , where the court held that there was no relevant desire or intention to transfer shares for the purpose of pre-emption provisions where what was proposed was to transfer the shares subject to a similar condition. It cannot, therefore, be said that the Quinlan shares had been ‘transferred, sold or otherwise disposed of save as provided in this clause 6’ for the purposes of cl 6.6. It follows that the February agreement is also not an attempt to transfer shares within cl 6.6.”
“[38] In my judgment, the short answer to this point is that, by virtue of cl 6.17, no interest in shares could be conveyed other than in a manner for which cl 6 provided. I shall have more to say about cl 6.17 below. [39] There is a further reason for rejecting [counsel for the petitioner’s] submission. The fundamental characteristic of the February agreement is that it was conditional on compliance with Coroin’s pre-emption articles. In my judgment, an interest in shares would not pass under a contract for the sale of shares which is subject to a true condition precedent until the condition precedent is fulfilled: Wood Preservation Ltd v Prior[1968] 2 All ER 849 at 845–856 (affirmed on other grounds[1969] 1 All ER 364 ,[1969] 1 WLR 1077 ). Fulfilment of the condition precedent was under the control of the Barclay interests, but that did not, in my judgment, prevent it from being a true condition precedent so far as Mr Quinlan as transferor was concerned (cf Michaels v Harley House (Marylebone) Ltd[1999] 1 BCLC 670 ,[2000] Ch 104 ). (Contrary to [counsel for the petitioner’s] submission, Mr Quinlan could not waive the condition as to the chargee’s consent.)”
“The agreement of17 February 2011 was an agreement for the sale of Mr Quinlan’s shares subject to compliance with the pre-emption provisions. The agreement to transfer ownership of the shares was therefore conditional in nature. In order to perform the agreement it was necessary as a first step for Mr Quinlan to give a transfer notice pursuant to cl 6.1. The agreement does not contain any express requirement for him to do that, but it does oblige him to provide assistance to the buyer to the extent reasonably necessary to give effect to the terms of the agreement and in my view it is not difficult to find within the agreement an obligation on him to give such a notice forthwith or whenever asked to do so. Given the nature of the subject matter, the court would in my view compel compliance with that term, but that is not the same as saying that as from the time the agreement was entered into the contract to transfer the ownership of the shares was specifically enforceable.”
“[137] … Until the pre-emption provisions have been triggered by the giving of a transfer notice and the existing shareholders’ rights under them have been exhausted the purchaser does not have the right to call for the title to any remaining shares to be transferred to him. This tends to support the conclusion that no proprietary interest of any kind could pass to the Barclay interests under the agreement of17 February 2011 until the whole of the pre-emption process had been completed. [138] Even if that is wrong, however, and the Barclay interests would otherwise have acquired a contingent equitable interest in Mr Quinlan’s shares under the agreement, cl 6.17 is, in my view, effective to prevent the creation of any such interest ….”
“[169] … The sale agreement was in substance one for the sale of such (if any) shares as were available to be sold after compliance with the pre-emption provisions; and it was a condition of the agreement that those provisions should first be complied with. [170] Prior to compliance with such condition, EHGL could not, by a claim for specific performance, compel the transfer to it of any part of Mr Quinlan’s shareholding, let alone the entire shareholding; and, if it could not do that, the agreement cannot have given it any proprietary interest in the shares. As the identification of the sale shares and their price was conditional upon the outcome of prior compliance with the pre-emption provisions, it follows that if any relevant ‘interest’ in shares was destined to pass under the agreement it could only so pass at the earliest once the sale shares had been identified, which could not happen until after such compliance.”
“In the circumstances set out in paragraph [67] above, Ms Bandurska and/or Mr Czeremcha and/or Mr De Makay and/or the Bank acquiesced in and/or failed to take steps to prevent and/or failed to inform PREI about the wrongdoing of Wladyslaw Jaroszewicz, Michael Jaroszewicz, Fazita and/or M-JWK.”
“The duty imposed on directors to act bona fide in the interests of the company is a subjective one …. The question is not whether, viewed objectively by the court, the particular act or omission which is challenged was in fact in the interests of the company; still less is the question whether the court, had it been in the position of the director at the relevant time, might have acted differently. Rather, the question is whether the director honestly believed that his act or omission was in the interests of the company. The issue is as to the director’s state of mind. No doubt, where it is clear that the act or omission under challenge resulted in substantial detriment to the company, the director will have a harder task persuading the court that he honestly believed it to be in the company’s interest; but that does not detract from the subjective nature of the test.”